Repeal of state internet service tax will impact Rapid City's expansion

iPhone connects to free WiFi at Black Hills Bagels

RAPID CITY, S.D. (KEVN) - South Dakota is one of the last states to still have an internet service tax, which is built into the cost of your internet provider. But that's going to change next summer.

The repeal of the state internet service tax will impact Rapid City's general fund but could also put money back in the public's pockets.

"In a business like this where you're not growing and expanding services with an expanding community, you're really pulling back on those services. So people have more money in their pocket, and theoretically, they'll spend that money but as far as spending it enough times to return $1.4 million, I think that's probably a stretch to believe that can happen," said Rapid City Mayor Steve Allender.

The city's general fund pays for services such as police, parks, and libraries.

With this state tax repeal, the city could slow down emergency response times and outdoor maintenance.

However, not everyone is aware the internet service tax exists.

"It's nice to have the WiFi not only just to be able to do a little work if we need to, but if we need, my son has type 1 diabetes and so his monitoring is hooked up to the WiFi, and we'd always just have to use data, it's nice just to be able, to not have to worry about something extra," said Rapid City resident Morgan VonHaden.

Starting in 2020, the repeal of South Dakota's tax on internet service projects a $700,000 loss in city funding and that number is going to double in 2021.

"That's significant for us because $1.4 million makes up about 4.75% of all our general fund revenue," said Allender.

"If the city has to cut funding, I think it hurts so many different parts of just local non-profits that rely heavily on the city, and those are the organizations that need the support because they're helping a larger group of people and they're all our community members," said
VonHaden.

The city prioritizes spending on public safety and infrastructure, making non-profits at risk whenever the city budget is reduced.

"We'll delay growth in some areas to really make up for this, it's a missed, it puts a small glitch in our plan but it doesn't send us backwards," said Allender.